Congestion is Driving Southern California's Market... (Los Angeles, San Fernando: sale, selling a house, employment)

[Charles]

Originally Posted by SoCal35

Nice chart Charles. They look awfully close.

What were the actual numbers / home values for the two series???? Real (blue) vs. the 4% slope (red)

The graphic shows the values of the actual median house price in blue (data from the quoted poster). The blue line are the medians increasing from the 1982 median at a 4% rate. The Y axis is labeled with the dollar amounts.

[Lovehound]

Originally Posted by mcmsinger

In my humble opinion, they only thing that is keeping California's market prices high is congestion...

Which equals higher demand.... which equals higher prices.

Basic economics.

Aside from media portrayal, desirability & weather.

Once congestion & population goes down, prices will go down...

What makes you think that congestion is going to go down? Let alone population? Do you know something about the future that we don't know?

Los Angeles is popular because it's one of the nation's largest cities, it's got the glamor of beautiful weather and the entertainment industry, it's the land of opportunity (although not so much during this recession), because of its many outdoor activities including surfing, bike riding, hiking, golf, bicycle riding, skiing, outdoor shopping and dining, and most of it can be done year around in almost uniformly pleasant weather.

More people want to come to Los Angeles than leave it, there is only a limited amount of land or houses, so increasing demand and decreasing supply keeps housing prices high (at least most of the time although the recession has lessened that to some degree).

You can get a cheap house somewhere else in the country because people don't want to live there. More people want to live in L.A. so there's more demand for houses and that's why our housing prices are higher than in less desirable parts of the country.

[smdensbcs]

Originally Posted by SOON2BNSURPRISE

... Many people do buy homes that may look cost prohibitive but can become affordable with a plan ... They are not wealthy by any means just saved to get that first home. It took them 6 or 7 years to get a down payment for the first place.

My wife and I did the same thing. It has taken us a long time to come up with a down payment to get a home now as well. ... If you want to buy here and are willing to cut your expenses and have money placed in savings and a retirment account you can be a home owner in 5 years or less.

Well said. (sorry, I quoted selectively from longer post). Clearly, it CAN be done and IF the timing works in your favor, it can be done to great financial advantage. As a somewhat risk-averse individual who chose to seek greener pastures rather than pursue a life of crushing debt and/or endless 100+ hour work-weeks to obtain a coastal CA home earlier generations achieved without those things, I'm admitedly fairly biased in my perspective.

Here was the concern. (1) Work like a dog to get into prestigous professional school to increase likelihood of comparatively high income. (2) Finish professional school @ mid 1990's. (3) Scrimp/save like madman to pay off loans from professional school by year 2000. (4) Initiate soon2bsurprise-style 7 year down payment ferocious savings plan (which I'll refer to as the "7ydpfsp") in 2000. (5) If married, put off having kids indefinitely to accomplish 7ydpfsp. (6) Hallelujia! 7ydpfsp accomplished circa 2007 with no major job setbacks. So far so good. Finally have the down payment for that coastal CA starter house for $900K in OK but not very good neighborhood (price of house I buy has >doubled during the epic 7ydpfsp but I've trusted my elders that CA real estate is the way to "create wealth" by watching how things work for virtually everyone born in earlier generations).

So now its 2007 and, after playing by all the rules I was told to play for 25+ years ever since elementary school to put myself in position to "get in the game," I pull the trigger and buy. Whooooooops. A quick glance at SoCal35's chart of home prices tells me I'm almost immediately hearing on a continuous feedback loop that crazy sound Pac-Man hears when a PacGhost gets him and I can't get it to stop. Meanwhile, the person one solitary generation older who sold me the house (which they bought for a song in 1975 real dollars) is sipping fruity-drinks by a pool in Aruba laughing how PT Barnum was right - there IS a sucker born every minute. Oh, and by the way, my shiny new Prop 13 property tax bill (which kept the fruity-drink sipper's tax payments dirt cheap for decades and had me sitting in crowded public school classrooms with 35-40 other students), is $750/mo, thank you very much!

Then I wake up from the nightmare in a cold sweat, oh so very thankful for my non-coastal CA house in my established non-coastal CA neighborhood, my relaxed non-coastal CA wife, and my non-coastal CA kids who were born because the above nightmare of nightmares never played out in real life.

[Ultrarunner]

Originally Posted by smdensbcs

So now its 2007 and, after playing by all the rules I was told to play for 25+ years ever since elementary school to put myself in position to "get in the game," I pull the trigger and buy. Whooooooops. A quick glance at SoCal35's chart of home prices tells me I'm almost immediately hearing on a continuous feedback loop that crazy sound Pac-Man hears when a PacGhost gets him and I can't get it to stop. Meanwhile, the person one solitary generation older who sold me the house (which they bought for a song in 1975 real dollars) is sipping fruity-drinks by a pool in Aruba laughing how PT Barnum was right - there IS a sucker born every minute. Oh, and by the way, my shiny new Prop 13 property tax bill (which kept the fruity-drink sipper's tax payments dirt cheap for decades and had me sitting in crowded public school classrooms with 35-40 other students), is $750/mo, thank you very much!

I was in school pre prop 13 with more than 40 students per classroom.

The beauty of Prop 13 is that it applies equally to all assessed property in California with tax predictability the biggest benefit... Prop 13 eliminated the famous double digit property tax increases common in the 70's and I am grateful.

Bought my home at the peak of the boom from the man that built it in 1955... my taxes immediate went up 7 fold compared to what he was paying... It is now worth less and I have no plans to leave... I wouldn't have bought the property if I didn't like it and Prop 13 prevents increasing future taxes above the statutory maximum without a vote of the people... only 55% yes for school construction.

The seller is now in a retirement home paying a hefty sum each month for care... don't think they serve fruity drinks.

By the way, he was a decorated military hero and had no choice to serve or not... it was mandatory then and lucky to have survived.

Each generation thinks life was a bed of roses for the previous... often, it was anything but...

Prop 13 was in big part a response to the Serrano vs. Priest Decision that changed the funding of public schools... it was one thing to pay high property taxes to support LOCAL schools and quite another to have property taxes diverted away from LOCAL schools as is often the case with the implementation of this law.

http://web.me.com/joelarkin/Monterey..._v_Priest.html

[mcmsinger]

Originally Posted by Lovehound

What makes you think that congestion is going to go down? Let alone population? Do you know something about the future that we don't know?

Los Angeles is popular because it's one of the nation's largest cities

And so is New York City...

Yet it's a much more realistic market....

Long Island is considered the island of the wealthy yet it's far more realistic.

Yes - congestion will go down. There are plenty of people who don't belong there - who will eventually be forced at some point to leave.

California is all built upon DEBT... and nothing more...

It's a stalling airplane.

Buying a home on a huge mortgage with inflated prices along with congestion and high living costs is perfect equation into poverty.

Screw a down payment and screw mortgages. It's either you come in with all cash or stay out...

[mcmsinger]

Not too mention illegal immigrants - they need to be deported. Schools are horrible. Poor roads, highways and transportation. (Broke government)

Also the geographic location has one disadvantage - it's way to close to rival country: Mexico.

Mexico hates CA - because they believe it belongs to them.

Earthquakes are another risk and don't say building are earthquake proof - nothing is earthquake proof.

And wildfires can destroy a whole city if they ever get out of hand which can happen. Mother nature has far more resources than men with their firefighter trucks.

[mcmsinger]

And by the way - who said the Entertainment industry has to be in LA?

Right now - the INTERNET is taking that over...

[Lovehound]

Originally Posted by mcmsinger

Yes - congestion will go down. There are plenty of people who don't belong there - who will eventually be forced at some point to leave.

That's just crazy. How do you define congestion? I define it as population density, scarcity of land and overloaded streets and freeways.

Dude, what you see in present day Los Angeles is the best it will ever be, and in a dozen years they will call our present day "the good old days."

I don't care what is happening in New York City. This discussion is about Los Angeles, and you'll never see "congestion" any better than it is right this minute.

[Lovehound]

Originally Posted by mcmsinger

Not too mention illegal immigrants - they need to be deported. Schools are horrible. Poor roads, highways and transportation. (Broke government)

Also the geographic location has one disadvantage - it's way to close to rival country: Mexico.

Mexico hates CA - because they believe it belongs to them.

Nobody is sending any "undocumented workers" back to anywhere. Read between the lines. The. Government. Does. Not. Care.

Mexico is not a rival except for narcotics supply, transport, delivery and sales. Mexico is on the verge of becoming a government controlled by narcotics traffickers.

This is not about country vs. country. It's not a nationalistic issue, it's an economics issue. It's a class warfare issue. It's America's rich elitists waging warfare on America's middle class. The Mexicans have nothing to do with it except providing warm bodies for cheap manual labor.

[mcmsinger]

^ lol dude

Eventually something must come down. Everything has it's trend, fad and age... It all falls apart eventually.

California is a great city which offers something New York may never offer... But somethings about it need to change.

Only time will tell what happens but I predict people will finally suck it up and move. (That is those who are better off elsewhere.)